How all businesses can prepare for gender pay gap reporting

While the regulations target large organisations, companies of all sizes can take steps to close their gap

With gender pay gaps filling the headlines recently, including Google’s discrimination allegations and the BBC revealing huge discrepancies in male and female wages, it is not an issue that is likely to disappear easily or quietly.

Chris Evans was the highest-paid star of the BBC, earning between £2.2 and £2.25 million in 2016/2017. Meanwhile Claudia Winkleman was the highest-paid female, earning between £450,000 and £500,000. The top seven earners in the list of the BBC's 96 best-paid stars were all male. This is something the broadcaster has pledged to make equal by 2020, but other companies now have to prepare for their reports to go public.

It is important that we encourage organisations to respond appropriately. Aside from the financial and legislatory risk of unfair pay practices, they can have a significant impact on stakeholders internally (i.e. staff) and externally with customers. It is therefore critical to be proactive and prepared. The data presented should be seen as a snapshot on pay at a certain time, and not set in stone.

UK companies with a total ‘headcount’ of more than 250 in any one year are required to publish data about their gender pay gap. What will cause some concern to businesses is the definition of ‘headcount’. This includes employees, apprentices and workers. Agency workers are also included, but are counted by the agency providing them. Results must be published on the organisation’s own website and a government website within 12 months of these commencement dates: 31 March 2017 for the public sector and 5 April 2017 for the private and voluntary sectors.

The data presented must be based on six calculations:

1. Average gender pay gap as a mean average

2. Average gender pay gap as a median average

3. Average bonus gender pay gap as a mean average

4. Average bonus gender pay gap as a median average

5. Proportion of males and females receiving a bonus payment

6. Proportion of males and females when divided into four groups in order from lowest to highest pay.

While the government has targeted organisations of 250 people or larger, companies of all sizes can take steps now to close their gap. Taking a proactive approach will only benefit smaller companies, putting them on the front foot should the law change and improving equality among their workforces.

Organisations have the option to provide a narrative with their calculations. This should generally explain the reasons for the results and give details about actions that are being taken to reduce or eliminate the gender pay gap. The regulations do not account for individuals’ knowledge, experience or pay negotiations, which may distort the figures and should be captured in the narrative.

Advice for all businesses – including SMEs – to help reduce their gender pay gap includes:

Try to limit the influence of unconscious and conscious biases by training managers and salary decision makers to understand both.

Create awareness of the gender pay gap issue and get employees to support and encourage women to progress and ask for promotions (where available).

Review reward packages in terms of parental leave, flexible working and having access to high-quality childcare help for both men and women.

Challenge stereotypes that women are less valuable in an organisation because of child-rearing responsibilities – they should not assume a lower salary because of this.

While the focus is primarily on larger businesses, ignoring the pay gap will carry a risk for SMEs. Ensuring policies and reviews are implemented now will ensure any systematic inequality is tackled head on; this then won’t pose a problem if the regulations are extended to small businesses. This will not only improve your organisation’s performance but will undoubtedly strengthen the workforce and ultimately the economy.

For companies lacking the internal support required for these measures, seeking external professional guidance can ensure businesses are given objective advice on data gathering and their options going forward.